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Client Spotlight

Chicago Atlantic Group: Cannabis-Focused Direct Lending

Chicago Atlantic Group provides flexible debt capital solutions to the cannabis, hemp, and ancillary industries in the U.S. and Canada. State-licensed cannabis and hemp companies typically have high quality collateral such as real estate but are cut off from traditional debt financing.

The market opportunity for cannabis debt is large as this rapidly-growing industry is facing a credit desert. Medical or adult-use cannabis is now legal in over 37 states and cannabis is projected to be a $24 billion industry by 2025. Small organizations dominate the industry and are unlikely to attract capital from institutional investors or banks due to federal law. They are therefore willing to pay above-market interest rates for obtaining debt.

Chicago Atlantic Group was founded by principals who have had successful careers in private credit, retail, real estate development and investing, investment advice, risk management, and consulting. To meet the capital needs of these hemp and cannabis companies, Chicago Atlantic formed a direct lending fund that provides senior secured loans from $1 million to $10 million in loan size backed primarily by real estate like warehouse or retail space.

“As stewards of capital we focus on delivering equity-like returns with strong collateral protection through first lien loans. We target returns in the mid to high teens and seek low loan-to-value opportunities with hard collateral to protect principal,” said Principal Andreas Bodmeier, Ph.D. Strong investor relationships ensure a high level of integrity and transparency supported by quarterly reports and distributions.